The Corporate Governance Role of the Media: Evidence from Russia / Alexander Dyck, Natalya Volchkova, Luigi Zingales.

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Dyck, Alexander

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w12525.Publication details: Cambridge, Mass. National Bureau of Economic Research 2006.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999-2002. This setting offers us three ideal conditions for such a study: plenty of corporate governance violations, no alternative mechanisms to address them, and the presence of an investment fund (the Hermitage) that actively lobbies the international press to shame companies perpetrating those violations. We find that Hermitageâ€™s lobbying is effective in increasing the coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even when we instrument coverage with an exogenous determinant, i.e. the Hermitageâ€™s portfolio composition at the beginning of the period. The Hermitageâ€™s strategy seems to work in part by impacting Russian companiesâ€™ reputation abroad and in part by forcing regulators into action.

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Working Paper	Biblioteca Digital	Colección NBER	nber w12525 (Browse shelf(Opens below))	Not For Loan

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September 2006.

We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999-2002. This setting offers us three ideal conditions for such a study: plenty of corporate governance violations, no alternative mechanisms to address them, and the presence of an investment fund (the Hermitage) that actively lobbies the international press to shame companies perpetrating those violations. We find that Hermitageâ€™s lobbying is effective in increasing the coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even when we instrument coverage with an exogenous determinant, i.e. the Hermitageâ€™s portfolio composition at the beginning of the period. The Hermitageâ€™s strategy seems to work in part by impacting Russian companiesâ€™ reputation abroad and in part by forcing regulators into action.